Has Slack Really Won the Office Chat War? Hell, No!

Snagging Atlassian's cast-offs was smart, but that hardly cements Slack as a leader in office chat. Plenty of muscle is heading into that space, including a suddenly very hungry Facebook.

Big news in the office chat arena: Atlassian threw in the towel.

After scoring big with HipChat and then trying to score even bigger with the more modern Stride, Atlassian couldn't meet its internally projected numbers with either product, so it sold them both to what even I, a recovering Microsoftee since 2012, realise is (currently, at least) the best-known name in office chat: Slack.

While the exact financial terms of the deal remain undisclosed, both companies seem to be getting what they want. But while that's great for Slack, it still can't call itself the winner of the office chat wars. Hell, it can't even call itself the clear leader.

Looking at the Deal

When you look at the deal's plusses, everyone should be smiling. Atlassian gets to dump two products the company said weren't living up to expectations while simultaneously enjoying an 18 percent jump in its share price. The benefit to Slack is two-pronged once the deal takes full effect in February 2019: First, it gets to do away with a key competitor; and second, its overall customer number gets an easy boost as long as it manages to retain them once its migration of HipChat and Stride accounts actually starts to happen.

But does that mean Slack's won the office chat war? Not even close.

"We use Slack extensively," said Ashvin Naik, CEO of SalesPal.io, itself a collaboration-oriented company developing conversational intelligence analysis tools. "But the main reason we're using it now is because it's free. If we were paying for it, I'd want more value along the lines of what [Microsoft] SharePoint offers."

He went on to say that in his mind, the chat arena is evolving so fast it's impossible to predict who'll be leading even 24 months from now, citing his high school-age son looking over his shoulder one day and commenting that his Slack interface "looks like a lame version of Discord."

What that shows, aside from a need for PCMag to review Discord from a business perspective, is that the office chat and online collaboration arena is still a development hotbed and therefore considered dewy tech darlings by VCs—witness Slack's own $250 million financing round only last year. That means no matter what Slack does today, a well-funded new unicorn could show up at any time. Remember also that while Atlassian was certainly a key competitor for Slack, it was hardly the only one and the remaining list still carries a lot of muscle, notably Google, Microsoft, and just this past week, Facebook.

Workplace Garners Value

That's right, it seems Facebook finally took a long look at its Workplace by Facebook codebase and decided to add some actual value outside of automatically building your org chart.

So it bought Redkix, an office chat startup that was building some innovative organizational features on top of the typical chat interface. It was also well on its way toward taking sizeable nibbles out of Slack's market share with initial investments from several angels as well as Wicklow Capital and Salesforce Ventures. If Facebook manages to keep the innovation momentum flowing instead of simply disappearing the Redkix code, Slack could see a powerful new competitor emerge likely by the middle of next year. And not just a powerful one, but a hungry one given Facebook's epic share price faceplant earlier this week.

That kind of description paints Redkix as a fairly small fish in a rather large pond, but it's now part of a behemoth, and Slack isn't that far out of swaddling clothes itself. The aforementioned $250 million the company raised last year from SoftBank Group Corp brings its outside investment total to just over $840 million. Combined with its publicized growth and revenue numbers, that has analysts valuing Slack at around $5.1 billion. But let's look at those numbers a little more closely.

According to Slack, it's currently generating $200 million of annually recurring revenue with over 8 million overall users, roughly 3 million of which are actually paying for the service as of May 2018. Its own growth numbers are adding roughly 1 million users to that paid number every year. Which, to be fair, is very fast. However, even at that speed, it'll be a while before it gets out of its $840 million investor hole, let alone grows into its $5.1 billion valuation, and yet even longer before it's bringing in the buckets of pure profit that behemoths like Google and Microsoft are raking in.

So let's look at the behemoths a little more closely. Microsoft Office, which includes its dedicated Slack-killer Microsoft Teams, is already at 135 million users and most can be classified as paid. Google claims 4 million users for Google G Suite, which includes access to Google Hangouts Chat, or whatever they're calling it this week, and it puts in a fraction of the marketing effort of either Slack or Microsoft. Upshot? Based purely on numbers, Slack can't even call itself the current leader in office chat, much less the overall winner.

The Little Guys

And lest we forget, behemoths aside, that still leaves a number of well-positioned, second-tier players, including Zoho Cliq, Cisco Webex Teams, and RingCentral Glip—all known names, each with an established customer base, each also vying for its piece of the office messaging pie. Right behind them are newer players, perhaps more mature than Redkix, but still definitely able to employ the startup moniker, a list that includes companies like Discord, Twist, and Ryver, among several others.

All in all, Slack's made a solid move purchasing Hipchat and Stride. But it's a move that'll serve mainly to firm up its hold as one of the best-known names in office chat. Which is great, but not in itself a leadership metric. Who the actual leader is in that industry is up for grabs on an almost monthly basis and as for an overall winner? We're a long way from settling on that name.